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This is easier to say than to do. Every client needing to build or renovate is faced with trying to
assemble the best design and construction team. They usually hire the design team first and do
so with a qualifications based selection. For a variety of reasons (schedule being the most
common), the contractor selection is increasingly being made based on something other than a
low bid. The question is what to use as the basis of the contractor selection.
Best value bid or qualifications based selection? When the contractor selection is based on
something other than a low bid, the first question is should the Client owner make their
contractor selection based on a process that includes some weighting of the total construction
cost, or not?
Best value bid: If the answer is yes, to include the total cost of construction as part of the
contractor selection criteria, then the type of selection being referred to is increasingly being
called a best value bid. About half of the industry would refer to it as a variation of the designbid-build delivery method, and the other half would refer to it as type of construction
management at-risk. Using a best value bid approach involves a host of challenges for the
Client owner including:
What information will be used by the contractor in estimating the total construction
cost?
When should the contractor be hired?
How complete should the design be at the time of contractor selection?
How much weight should be put on the total construction cost?
Will the contract be a lump sum or not-to-exceed price?
Are changes likely after the contractor selection?
How are contingencies and potential cost savings handled?
There are risks associated with each of these issues. There are also proven approaches that
are available to mitigate the risks associated with each of these challenges.
Qualifications based selection (QBS): If the answer is not to include the total cost of
construction as part of the contractor selection criteria, then the type of selection is considered
to be a qualifications based selection (QBS). If there were no element of price, then many
would refer to this as a pure qualifications based selection. However, it is important to note
that even when a contractors fees and/or general conditions are part of the selection, if the total
construction costs are not, the industry would still refer to the selection as a qualification based
selection.
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